Pros & cons of trading-in vs. selling privately

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Before buying a new car, most of us need to decide whether to trade our existing car in to the dealer, or to sell it privately. The decision really depends on what kind of vehicle you own, the condition of the vehicle, the availability of your time, and the financial implications.

Here are some pros and cons of trading-in vs. selling privately.

1. Trading in

• It's an easy way to dispose of your current car. All you have to do is turn it over to the dealership.
• A car dealership will accept any car in any condition.
• You will get less money than selling it yourself. At best, you’ll get the vehicle's wholesale value. At worst, you may get less than wholesale.  It really depends on the condition of your vehicle and how desirable it is.
• You can use the trade-in amount as the down payment on the new car.
• To get the best price, you will probably have to haggle with an experienced salesperson over the trade-in value.
• There's a tax advantage. You’ll pay tax only on the difference between the trade-in value and the new-car price.

2. Selling it yourself

• This requires considerable effort and time, including figuring out the market value, detailing the vehicle, placing ads, taking phone calls, dealing with strangers, and giving test drives.
• You'll usually get the most money for your car, somewhere between the vehicle's retail and wholesale values.
• Selling privately takes more time. You might not be able to sell your current car until after you buy your new car. This means you won’t be able to use the money as a down payment. And, if the old car isn't paid off, you could have an overlap of car payments until you sell it.
• If your vehicle has high mileage, lots of wear and tear and is not in demand, it may be difficult to sell.
• You will need to negotiate with a private buyer and ensure that the form of payment is valid.
• You will have to pay more tax on the new car, but if you get more money for the old car by selling it yourself, you could still come out ahead.

For more information on how to sell your vehicle yourself, please click here to download a complimentary copy of our “7 Steps for Getting Top Dollar For Your Car”.  It’s packed with tips on how to sell privately on Craigslist and other online sites.

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